STOCK MARKET

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ABOUT STOCK MARKET:

A Stock Market or securities market  could be a gathering of buyers and sellers of stocks in an exceedingly single platform. Before BOLT was introduced in 1995, people accustomed trade standing within the trading ring. Nowadays, all trading happens on computer terminals at a broker’s office or through the web. Share market and securities market is one and therefore the same thing.

 

stock market
STOCK MARKET

DIFFERENCE BETWEEN SHARE MARKET AND STOCK MARKET:

A share market is where shares are either issued or traded in.

A securities market is analogous to a share market. The key difference is that a exchange helps you trade financial instruments like bonds, mutual funds, derivatives also as shares of companies. A share market only allows trading of shares.

The key factor is that the securities market – the essential platform that gives the facilities accustomed trade company stocks and other securities. A stock could also be bought or sold given that it’s listed on an exchange. Thus, it’s theassembly of the stock buyers and sellers. India’s premier stock exchanges are the Bombay Stock Exchange(BSE) and the National Stock Exchange(NSE).

Investment could be a key to your safe and secured future. However, to beat the impact of inflation, investments in plain old financial instruments doesn’t seem to be adequate. to induce something extra out of your investments, Share market offers the lucrative opportunity of purchase and trade of securities like stocks and options.

TYPES OF SHARE MARKET:

THERE ARE TWO KINDS OF SHARE MARKETS –

(1)PRIMARY MARKETS

This where a company gets registered to issue a certain amount of shares and raise money. This is also called getting listed in a stock exchange.

A company enters primary markets to raise capital. If the company is selling shares for the first time, it is called an IPO.

(2)SECOND MARKETS

Once new securities are sold within the primary market, these shares are traded within the secondary market. this is often to supply an opportunity for investors to exit an investment and sell the shares. Secondary market transactions are mentioned trades where one investor buys shares from another investor at the prevailing market value or at whatever price the Two parties agree upon.
Normally, investors conduct such transactions using an intermediary like a broker, who facilitates . Different brokers offer different plans

How does the share market work:

The stock brocker is like your friend, philosopher and guide within the exchange. The stock broker won’t only execute your transaction but also advise on what to shop for and when to shop for and sell stocks to assist you get good returns. Here are 3 ways stock brokers add value to you.
Stock brokersprovide you with the platform toexchange equities and F&O both on the BSEand also the NSE. Even once you trade on the net, you really trade through the broker’s platform or website only.

Stock brokers also give you guidance and advice on what to shop for and sell and also when to shop for and sell. they supply you short term andfuture research ideas on how best to trade and invest so on make profits within the exchange.

Stock brokers also facilitate your along with your trading process. after you buy shares your payment of cash and therefore the credit to your demat account are all handled by the broker. Similarly after you sell shares, the debit to your demat account and credit to your checking account are routed through your broker only.

THE FINANCIAL INSTRUMENTS TRADED IN A STOCK MARKET:

Bonds:

Companies need money to undertake projects. They then pay back using the cash earned through the project. a method of raising funds is  bonds. When an organization borrows from the bank in exchange for normal interest payments, it’s called a loan. Similarly, when an organization borrows from multiple investors in exchange for timely payments of interest, it’s called a bond.

Thus, a bond may be a means of investing money by lending to others. this is often why it’s called a certificate of indebtedness. once you invest fettered, it’ll show the face value – the numberof cash being borrowed, the coupon rate or yield – the rate of interest that the borrower has got to pay, the coupon or interest payments, and also the deadline for paying the cash back called because thedate.

Mutual Funds:

These are investment vehicles that allow you to indirectly investing in share market market or bonds. It pools money from a group of investors, then invests that sum in financial instruments. this is often handled by an expert fund manager.

Every mutual fund scheme issues units, which havea particular value a bit like a share. once you invest, you thus become a unit-holder. When the instruments that the MF scheme invests in make money, as a unit-holder, you get money.This is either through an increase within the value of the units or through the distribution of dividends – money to all or any unit-holders.

Secondary Market:

Investing in share market is another place for raising money. In exchange for the cash, companies issue shares. Owning a share is adore holding a little of the corporate. These shares are then traded within the Indian share market. Consider the previous example; your project is successful and then, you would like to expand it.

Now, you sell half your company to your brother for Rs 50,000. you place this transaction in writing – ‘my new company will issue 100 shares of stock. My brother will buy 50 shares for Rs 50,000.’ Thus, your brother has just bought 50% of the shares of stock of your company. he’s now a shareholder. Suppose your brother immediately needs Rs 50,000. He can sell the share within the secondary market and obtain the cash. this might be more or but Rs 50,000. For this reason, it’s considered a riskier instrument.

Shares are thus, a certificate of ownership of an organization. Thus, as a stockholder, you share a little of the profit the corporate may make furthermore as a little of the loss a corporation may take. because the company keeps doing better, your stocks will increase in value. Read more about differing types of stocks.

Derivatives:

The value financial instruments like shares keeps fluctuating. So, it’s difficult fix a selected price. Derivatives instruments come handy here.

These are instruments that facilitate your trade the longer term at a price that you simply fix today. Simply put, you enter into an agreement to either buy or sell a share or other instrument at a particular fixed price. Read more to underdtand the way to buy or sell a derivative.

Who Determines the Shares Prices in the Market :

The market determines the price of the share. Normally, share prices go up when the company is growing very fast or it is earning very good profits or it gets new orders. As demand for the stock picks up more investors want to buy the stock at higher prices and that is how the price goes up. Price of share is determined by demand and supply.

What are Stock Indices?

Thousands of companies list their shares on the Indian share markets. From these, a few similar stocks are grouped together to form an index. The classification may be on the basis of company size, industry, market capitalization, or other categories.

Difference between Offline Trading and What is Online Trading:

Online trading is all about buying and selling shares on the internet sitting in the comfort of your office or your home. You just need to log into your trading account and you can buy and sell shares. Offline trading is trading by visiting your broker’s office or by telephoning your broker.

Investing within the share market is risky. Hence, they have to be regulated to guard investors.Security and Exchange Board of India (SEBI) is remitted to oversee the secondary primary markets in India since 1988 when the govt of India established it because the regulatory body of stock markets. Within a short period of  time, SEBI became an autonomous body through the SEBI Act of 1992.

SEBI has the responsibility of both development and regulation of the market. It regularly comes out with comprehensive regulatory measures geared toward ensuring that end investors take pleasure in safe and transparent dealings in securities.

Basic objectives Security and Exchange Board of India (SEBI) of are:

Protecting the interests of investors in stocks
Promoting the event of thesecurities market
Regulating the stock exchange.

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